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Anti-tax advocates were successful in defeating the imposition of a state income tax.

Shakedown in Tennessee

The budget battle in Tennessee is over, at least for now. For the fourth consecutive year, anti-tax advocates were successful in defeating the imposition of a state income tax, and the legislature fulfilled its constitutional obligation to pass a balanced budget — despite the state’s $800 million deficit.

Victory?

Far from it.

When all was said and done, Tennesseans were hit with the largest tax increase in state history -- $933 million.

The budget passed by the legislature last week includes a 1-cent increase in the state sales tax, significant boosts in sin taxes and additional levies on businesses. When the new increases take effect on July 15, Tennessee will have one of the highest sales tax rates in the country, as the citizens of all but four of the state’s 95 counties will be forced to pay a rate of 9 percent or above after local option taxes are added to the new 7 percent rate.

All increases were approved without the slightest attempts by the legislature to cut the state’s out-of-control spending. Calls for reform in TennCare, the Hillary Clinton something-for-nothing health care model which accounts for a quarter of the state’s budget, were ignored. Tennessee’s enormous transportation budget went untouched. Contrarily, this year’s budget includes nearly $500 million in new government spending.

Republican Governor Don Sundquist, elected eight years ago as an income tax opponent, led the fight for a state income tax the past four years. 2002 is his last year in office as he’s term-limited out.

Sundquist failed in obtaining his desired legacy. However, his efforts to impose an income tax resulted in far worse for Tennesseans. Fortunately for them, he will be seeking a new line of work come January.

For more on this issue written by the Center, read:

[Posted July, 11, 2002]

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